Plastic in Your Wallet: the Ups and Downs of Credit Cards
A Credit Article Contributed by Cathy Wilson
Plastic in Your Wallet: the Ups and Downs of Credit Cards
"Oh, I'll just put it on my credit card," you may hear yourself saying when you see that irresistible pair of shoes or cruise offer. What you may be forgetting -- we all do -- is that you are actually spending your own money.
The Real Cost of Credit Cards
In fact, you may be spending a lot more of your hard-earned money on your credit card than you could possibly imagine.
Theoretically, credit cards be helpful to you. Sometimes you must have one to do a certain thing: like reserve a hotel room or rent a car. And if you shop online or through catalogs, credit cards are almost a must. If you used them for just these reasons -- and paid of the balance totally every month -- you would probably end up far ahead of the game. In fact, wealthy people sometimes use their credit cards in just this way: they buy stuff with them and pay them off every month. In this way, the credit card statement becomes a nifty bookkeeping tool and allows for easy business writeoffs.
Pitfalls of Credit Cards
Let's say you get a credit card with a low interest rate. That may, unfortunately, only be an introductory rate. You need to check the fine print. If the rate is slated to rise a while later, you will end up paying a great deal more than the money you actually spend. Also check out the policy on late fees on credit cards. Recently, credit card companies have been having a heydey with late fees and over-the-limit fees.
If your payment does not arrive before 2 p.m. on the due date, you may end up with a hefty late fee to pay. And if you inadvertently spend a dollar over the limit amount, you may be dinged bigtime. And, sad to say, after just a couple of late payments, they c can charge you the a much higher interest rate as long as you have that card.
What to Look for in a Credit Card
What do you need your credit card for? That will help you decide what kind you might want to get?
Bank cards are issued by banks (for example, Visa, MasterCard and Discover Card). These are your regular run of the mill credit cards and offer various rates and arrangements.
Travel and entertainment (T&E;) cards, such as American Express and Diners Club are thought to be desirable with high credit limits. Remember though that every time you use them, you're going to have to pay back what you spend.
House cards are good only in the store that issues them, such as Sears, Penneys, gas station chains, and so on.
Some of the best details for credit cards are: no annual fee, low interest rate, a grace period for late payments, and no unexpectedly high jumps in interest rate.
Do you REALLY need a credit card? Actually no. Many people set up a debit card with their bank account. You can use these cards to reserve rooms and buy online without running up a debt you'll struggle to pay.
